9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (12) TMI 1084 - AT - Income TaxEstimation of income - bogus purchases - CIT(A) noted that in absence of visibility on correctness of the amount paid/ payable to creditors, the possibility of purchasing the goods from grey market at lower rates and recording the same at inflated price in books of accounts cannot be ruled out. However, if the entire purchases are disallowed, the corresponding sales also need to be ignored but the assessing officer has not done so - HELD THAT - As observed by ld CIT(A) that the assessee's business is recently started and it is into second year of its operations. During the year under consideration the gross profit earned by assessee is 13.05%. Therefore, ld CIT(A) restricted the addition to Rs. 9,80,121/- (Rs.75,10,503/- X 13.05%). We have gone through the above findings of CIT(A) and noted that there is no infirmity in the conclusion reached by ld CIT(A). That being so, we decline to interfere with the order of Id. CIT(A) in deleting the aforesaid additions. His order on this addition is, therefore, upheld and the grounds of appeal of the Revenue are dismissed.
Issues Involved:
1. Addition of Rs. 75,10,503/- related to purchases from M/s Veer Corporation and M/s Dhaval Gems. 2. Addition of Rs. 80,00,000/- under section 69A of the Income Tax Act. Summary: Issue 1: Addition of Rs. 75,10,503/- related to purchases from M/s Veer Corporation and M/s Dhaval Gems The Revenue challenged the restriction of the addition made by the Assessing Officer (AO) from Rs. 75,10,503/- to 13.05% of the same, arguing that the assessee failed to prove the genuineness of transactions with M/s Dhaval Gems and M/s Veer Corporation, identified as bogus entry providers. The AO had disallowed the entire purchase amount, treating it as bogus and taxed it under section 69C at 60%. The CIT(A) noted that only the profit element embedded in the purchases should be disallowed, relying on various judicial precedents, and restricted the addition to 13.05% of Rs. 75,10,503/-. The Tribunal upheld the CIT(A)'s decision, stating that the AO erred in making a 100% addition of purchases and only the profit element should be added to the income. The Tribunal dismissed the Revenue's grounds on this issue. Issue 2: Addition of Rs. 80,00,000/- under section 69A of the Income Tax Act The AO noticed that the assessee deposited Rs. 1.90 Crores in his bank account during the demonetization period and made an addition of Rs. 80,00,000/- under section 69A, as the assessee failed to prove the source of these deposits. The CIT(A) deleted the addition, accepting the assessee's claim that Rs. 1.10 Crores was disclosed under the PMGKY Scheme, 2016, and the remaining amount was from cash sales, supported by documentation. The Tribunal upheld the CIT(A)'s decision, noting that the assessee had sufficient cash on hand and the books of accounts were not rejected. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's grounds on this issue. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on both issues. The order was pronounced on 21/12/2023 in the open court.
|
